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UK retailers edge towards smart cards at point of sale
Sep CTT (Read Only)
8/31/01
8:37 AM
Page 1
ISSN 0965-2590
www.compseconline.com
September 2001
Vol. 13, No. 2
UK retailers edge towards smart cards at point of sale The UK banks and large retailers have reached agreement in principle to bring in smart card technology at the point of sale by the end of 2004. The commitment has been welcomed by John Denham, the Home Office minister responsible for crime prevention. But individual banks and retail groups are still in dispute over how the £1.1 billion (US$1.6 billion) cost of the switch to smart card technology is to be met. The banking industry says that by moving away from magnetic stripe cards to chip cards, coupled with the use of PIN codes at the point of sale, it will be possible to eliminate both counterfeit fraud and forged cardholder signatures. Latest figures from APACS, the banks’ payment association, show that, in 2000, the plastic card industry lost nearly £300 million (US$432 million) to fraudsters; this is the equivalent of 7p (US$0.10) on an average consumer card transaction of £50 (US$72). Industry losses are running at £1 million (US1.4 million a day, and are set to double by 2005
unless action is taken to combat card fraud. At a joint Home Office and card industry seminar, attended by banks, retailers and the police, Mr Denham said, “I am pleased that the banks and retailers want to commit themselves to introducing the new plastic technology that is so vital in fighting card fraud. But it is important,” he warned, “that individual negotiations between banks and retailers are concluded in time to ensure that implementation can take place by the end of 2004.” Some £750 million (US$1 billion) of the £1.1 billion bill is the cost to the banks of issuing smart cards and upgrading the 400,000 terminals that they lease to small and medium-sized retailers. The remaining £350 million (US$503 million) is the cost of adapting some 300,000 terminals owned by the larger retailers. The retailers argue that the banks should use the potential savings (from abolishing counterfeit fraud) to subsidize their new point of sale equipment.
NEWS HIGHLIGHTS The UK banks and large retailers have reached agreement in principle to bring in smart card technology at the point of sale by the end of 2004. ......................1 The European Commission has agreed funding for the eEurope Smart Card (eESC) Initiative. The aim is to stimulate the acceptance of smart cards across Europe..................................................3 Hypercom, one of the Big Three point-ofsale terminal suppliers, has announced that its entire product line is now smart card capable.........................................6 TSSI has won a three year contract from the National Health Service (NHS) to supply a smart card based system to manage information on doctors' immunization status.............................7
CHIP TALK A new section with insightful comment from leading industry figures ...............10
FEATURES
Contact: Richard Tyson-Davies at APACS, Tel: +44 20 7711 6234, e-mail: [email protected].
Blazing a trail for smart cards across Europe
Cafeteria payments mark US debut This summer, US consumers are, for the first time, using smart cards for debit/credit transactions at the point of sale. Admittedly, the consumers, and indeed the point of sale, are effectively part of the burgeoning smart card industry – the cardholders are employees of National Processing Company (NPC), which processes credit card payments for 550,000 merchant locations, and the point of sale is the NPC employee cafeteria in Louisville, Kentucky.
contents
Nevertheless, smart cards are at last being used for real payments made on real bank cards at real terminals. The first smart card-based payment was made at the NPC cafeteria in late July by Mark Pyke, executive vice president of NPC. The cards are issued by Providian Financial; they carry the Visa logo and use the internationally agreed EMV credit application.
Twelve project teams are working to get smart cards into the wallets of European consumers............................................11 The loyalty market Smart loyalty cards are becoming big business...............................................13
REGULARS News in Brief.............................3, 5, 7, 16 Events Calendar......................................9 Viewpoint .............................................16
Continued on page 2...
ISSN 0965-2590/01/$20.00 © 2001 Elsevier Science Ltd. All rights reserved This journal and the individual contributions contained in it are protected under copyright by Elsevier Science Ltd, and the following terms and conditions apply to their use: Photocopying Single photocopies of single articles may be made for personal use as allowed by national copyright laws. Permission of the publisher and payment of a fee is required for all other photocopying, including multiple or systematic copying, copying for advertising or promotional purposes, resale, and all forms of document delivery. Special rates are available for educational institutions that wish to make photocopies for non-profit educational classroom use.
8/31/01
8:37 AM
Page 1
ISSN 0965-2590
www.compseconline.com
September 2001
Vol. 13, No. 2
UK retailers edge towards smart cards at point of sale The UK banks and large retailers have reached agreement in principle to bring in smart card technology at the point of sale by the end of 2004. The commitment has been welcomed by John Denham, the Home Office minister responsible for crime prevention. But individual banks and retail groups are still in dispute over how the £1.1 billion (US$1.6 billion) cost of the switch to smart card technology is to be met. The banking industry says that by moving away from magnetic stripe cards to chip cards, coupled with the use of PIN codes at the point of sale, it will be possible to eliminate both counterfeit fraud and forged cardholder signatures. Latest figures from APACS, the banks’ payment association, show that, in 2000, the plastic card industry lost nearly £300 million (US$432 million) to fraudsters; this is the equivalent of 7p (US$0.10) on an average consumer card transaction of £50 (US$72). Industry losses are running at £1 million (US1.4 million a day, and are set to double by 2005
unless action is taken to combat card fraud. At a joint Home Office and card industry seminar, attended by banks, retailers and the police, Mr Denham said, “I am pleased that the banks and retailers want to commit themselves to introducing the new plastic technology that is so vital in fighting card fraud. But it is important,” he warned, “that individual negotiations between banks and retailers are concluded in time to ensure that implementation can take place by the end of 2004.” Some £750 million (US$1 billion) of the £1.1 billion bill is the cost to the banks of issuing smart cards and upgrading the 400,000 terminals that they lease to small and medium-sized retailers. The remaining £350 million (US$503 million) is the cost of adapting some 300,000 terminals owned by the larger retailers. The retailers argue that the banks should use the potential savings (from abolishing counterfeit fraud) to subsidize their new point of sale equipment.
NEWS HIGHLIGHTS The UK banks and large retailers have reached agreement in principle to bring in smart card technology at the point of sale by the end of 2004. ......................1 The European Commission has agreed funding for the eEurope Smart Card (eESC) Initiative. The aim is to stimulate the acceptance of smart cards across Europe..................................................3 Hypercom, one of the Big Three point-ofsale terminal suppliers, has announced that its entire product line is now smart card capable.........................................6 TSSI has won a three year contract from the National Health Service (NHS) to supply a smart card based system to manage information on doctors' immunization status.............................7
CHIP TALK A new section with insightful comment from leading industry figures ...............10
FEATURES
Contact: Richard Tyson-Davies at APACS, Tel: +44 20 7711 6234, e-mail: [email protected].
Blazing a trail for smart cards across Europe
Cafeteria payments mark US debut This summer, US consumers are, for the first time, using smart cards for debit/credit transactions at the point of sale. Admittedly, the consumers, and indeed the point of sale, are effectively part of the burgeoning smart card industry – the cardholders are employees of National Processing Company (NPC), which processes credit card payments for 550,000 merchant locations, and the point of sale is the NPC employee cafeteria in Louisville, Kentucky.
contents
Nevertheless, smart cards are at last being used for real payments made on real bank cards at real terminals. The first smart card-based payment was made at the NPC cafeteria in late July by Mark Pyke, executive vice president of NPC. The cards are issued by Providian Financial; they carry the Visa logo and use the internationally agreed EMV credit application.
Twelve project teams are working to get smart cards into the wallets of European consumers............................................11 The loyalty market Smart loyalty cards are becoming big business...............................................13
REGULARS News in Brief.............................3, 5, 7, 16 Events Calendar......................................9 Viewpoint .............................................16
Continued on page 2...
ISSN 0965-2590/01/$20.00 © 2001 Elsevier Science Ltd. All rights reserved This journal and the individual contributions contained in it are protected under copyright by Elsevier Science Ltd, and the following terms and conditions apply to their use: Photocopying Single photocopies of single articles may be made for personal use as allowed by national copyright laws. Permission of the publisher and payment of a fee is required for all other photocopying, including multiple or systematic copying, copying for advertising or promotional purposes, resale, and all forms of document delivery. Special rates are available for educational institutions that wish to make photocopies for non-profit educational classroom use.